Stifel Nicolaus reduced its rating on Discover Financial Services (NYSE: DFS) from Buy to Hold and removed its price target, previously at $39 a share.

Stifel Nicolaus commented, "We are downgrading DFS from Buy to Hold on valuation as the stock reached our $39 target price late last week. While we continue to be believers in the story and expect earnings momentum to persist near-term, we have a tougher time justifying another target price raise given the unsettled macro environment. Although QE3 may prove to successfully nudge the economy back into a sustainable recovery, this rally in financials appears a bit premature, in our view."